Jiu Rong Holdings Limited Issues Detailed Quarterly Update on Action Plan Addressing Auditor’s Disclaimer of Opinion

Key Points for Investors

• Material Uncertainty Over Going Concern: The company’s latest annual report includes a disclaimer of opinion from its auditor, raising significant concerns about the Group’s ability to continue as a going concern.
• Action Plan in Progress: Jiu Rong Holdings has outlined and is implementing a multi-pronged strategy to address liquidity issues and auditor concerns, including asset disposals, debt negotiations, and new financing channels.
• Asset Disposal: The Group has completed the sale of 11 bus charging stations in Hangzhou, with asset handover in progress, injecting much-needed working capital.
• Debt Negotiations: Active discussions are ongoing with major creditors (notably Westlake Electronics) regarding debt extension, possible interest rate reductions, and debt-to-asset swaps. Some suppliers have agreed to extend payment terms.
• Bank Borrowings: The Group has secured renewal or extension agreements for loans totaling approximately RMB 82.3 million, mitigating short-term refinancing risks.
• Cost Optimization: The Group is also tightening cost controls, enhancing operational efficiency, and optimizing its workforce to strengthen its financial resilience.
• Audit Scope Limitations: The auditor’s modified opinion also covers scope limitations regarding trade and other receivables.
• Trade Receivables Issue: The Group is owed money by Banco Nacional de Cuba. The Cuban bank continues to confirm the debt, and the Group has made some collections (EUR 117,000 post year-end). However, repayment is delayed due to Cuba’s foreign exchange shortages. The Board has decided not to impair this receivable, citing continued debt confirmation and partial recoveries.
• Other Receivables – Legal Action: Legal proceedings are ongoing against Mr. Shao Ziming (former executive director) to recover other receivables. Mr. Shao’s assets in Hong Kong are limited, and a property has been repossessed by a bank. The Group is seeking further court disclosure to trace additional assets.
• Ongoing Updates: The company will continue to publish quarterly updates until the auditor’s disclaimer is resolved.

Detailed Overview for Shareholders

Background: Auditor’s Disclaimer and Action Plan

Jiu Rong Holdings Limited finds itself under critical scrutiny after its auditor issued a disclaimer of opinion on the most recent set of consolidated financial statements, primarily due to material uncertainties over the Group’s ability to continue as a going concern. This has direct implications for the company’s share price, as it signals heightened financial risk.

Action Plan to Address Financial Health

1. Disposal of Non-Core Assets:
   • The Group has finalized the sale of 11 bus charging stations in Hangzhou, approved at an EGM on 16 January 2026.
   • Asset handover is in progress and is expected to provide immediate working capital relief.
2. Creditor Negotiations:
   • Ongoing discussions with Westlake Electronics for loan extensions, interest rate reductions, and potential debt-to-asset swaps.
   • Some suppliers have agreed to extend payment terms, alleviating liquidity pressure.
3. Bank Financing:
   • The Group has renewed or extended bank borrowings totaling around RMB 82.3 million, except for a disclosed litigation with Hangzhou United Rural Commercial Bank.
4. Additional Financing and Cost Controls:
   • Exploring all feasible channels for new financing.
   • Implementing strict cost controls, improving operational efficiency, and optimizing human resources.

Audit Scope Limitations and Receivables Issues

• Trade Receivables (Banco Nacional de Cuba):
  • The Group’s claims are regularly confirmed by the Cuban state bank, which issues debt confirmation letters every six months.
  • Collections continue, with EUR 117,000 recovered after the reporting period. However, repayments are slow due to Cuba’s foreign exchange crisis, not a refusal to pay or a credit issue.
  • No impairment provision has been made, as ongoing confirmations and cash inflows support the receivable’s validity.
• Other Receivables (Litigation Against Former Director):
  • Legal action is being taken in the Hong Kong High Court against former executive director Mr. Shao Ziming.
  • Mr. Shao’s disclosed Hong Kong assets are modest (HK\$396,000 in bank deposits and a car parking space worth approximately HK\$1.4 million). His Tsuen Wan property has been repossessed due to mortgage arrears.
  • The Group is seeking further asset disclosure via a court hearing scheduled for 24 March 2026 and continues to investigate whether Mr. Shao has undisclosed or overseas assets.

Potential Impact on Share Price

• The auditor’s disclaimer of opinion and ongoing material uncertainty regarding the Group’s ability to continue as a going concern could significantly affect investor confidence and the company’s share price.
• Resolution of major receivables, particularly from Banco Nacional de Cuba or recovery from legal proceedings against Mr. Shao, could materially affect the Group’s liquidity position and market perception.
• Successful execution of the asset disposal and refinancing plans is critical for maintaining solvency and could provide upside if liquidity risk is reduced.
• Ongoing quarterly updates and any material progress (or setbacks) will likely result in share price volatility.

Important Shareholder Advisory

The Board urges shareholders and potential investors to exercise caution when dealing in the Company’s shares, given the ongoing financial uncertainties and the auditor’s disclaimer.

Board Composition

• Executive Directors: Mr. Chen Yunxiang, Mr. Yan Zhendong
• Independent Non-executive Director: Mr. Hua Nengdong

Ongoing Disclosure Commitment

The Company will issue quarterly updates until the disclaimer of opinion is resolved, and may provide additional announcements on any material developments.

Disclaimer: This article is a summary and analysis based on the company’s official disclosures as of 26 February 2026. It is intended for informational purposes only and does not constitute investment advice. Investors should consult their financial advisor and carefully consider all public filings and announcements before making any investment decisions. Share prices can be highly volatile in response to such disclosures.

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